HYATT v. PATO

Summary:  District Courts have jurisdiction to hear APA challenges to the PTO’s denial of a petition for rulemaking. An Examiner’s ability to reopen prosecution under a new ground does not deprive applicants of their right to maintain an appeal.

Hyatt filed a petition to the PTO to repeal MPEP § 1207.4 arguing, among other things, that an examiner’s ability to reopen prosecution to enter a new ground of rejection conflicted with 35 U.S.C. § 6(b)(1)’s creation of a right for applicants to appeal rejections. When the PTO denied the petition and a subsequent request for reconsideration, Hyatt filed suit challenging denial of the petition in Nevada district court on the same grounds.  The district court granted summary judgment to the PTO determining that it lacked subject matter jurisdiction, reasoning that an order invalidating MPEP § 1207.4 could affect the exclusive jurisdiction Congress granted the Eastern Virginia district court and Federal Circuit to review final PTAB application decisions.

The Federal Circuit reversed the district court’s dismissal for lack of subject matter jurisdiction, but affirmed the grant of summary judgment on other grounds.  First, the Federal Circuit found that the exclusive jurisdiction to review final PTAB application decisions did not displace a district court’s jurisdiction over APA challenges to a PTO’s denial of a petition for rulemaking. The “process for petitioning the PTO for rulemaking is completely separate from the patent application examination process that culminates in final PTAB decisions.”

Next, the Federal Circuit addressed the timeliness of Hyatt’s challenges. The first two challenges, a procedural challenge based on failure to provide public notice and an opportunity to comment and a policy-based challenge based on an alleged conflict between MPEP § 1207.04 and 37 C.F.R. §41.39, accrued at the time MPEP § 1207.04 was adopted, and were time-barred.  Hyatt’s third challenge, a substantive challenge alleging that MPEP § 1207.04 violates 35 U.S.C. § 6(b)(1), accrued when his petition to the PTO was denied and was, therefore, not time barred. 

The third challenge, however, failed on the merits. The Federal Circuit held that allowing examiners to reopen prosecution does not deprive applicants of their right to appeal final examiner rejections because it does not circumvent PTAB review.  The Federal Circuit further explained that nothing in 35 U.S.C. § 6(b)(1) suggests the PTO cannot impose conditions on the PTAB’s ability to reach the merits of an appeal or delay the appeal.   Accordingly, the Federal Circuit remanded for the district court to enter judgment in favor of the PTO.